Future FAA funding uncertain as legislators debate the details

 - July 27, 2007, 7:28 AM

With stark differences between House and Senate versions of FAA reauthorization bills working their way through Congress, some industry and congressional insiders see little chance of an agreement before September 30, the day when current taxes and fees that support the FAA expire.

In late June the House Transportation and Infrastructure Committee released H.R.2881, which called for a modest increase in the fuel taxes paid by general aviation. That proposal did not include the $25 turbine IFR modernization surcharge for each flight segment contained in a Senate reauthorization bill.

General aviation interests immediately embraced the House bill, which recommends raising the jet fuel tax from 21.8 cents per gallon to 30.7 cents per gallon and avgas from 19.3 cents per gallon to 24.1 cents per gallon. More important, it does not contain the additional flight surcharge for turbine-engine aircraft.

GA has been united in its opposition to user fees, which is how it describes the $25 surcharge. Although piston-engine aircraft would be exempt from the levy under Senate S.1300, the general aviation industry believes that if the surcharge is approved for turbine aircraft, it would be only a matter of time before such charges would drift downward. Furthermore, the fees can be adjusted annually by the FAA Administrator.

In addition to the surcharge, S.1300 would raise the tax on GA jet fuel from 21.8 cents a gallon to 49 cents a gallon. There would be no increase in the 19.3-cents-a-gallon tax on aviation gas.

Both bills are less onerous than the one the Bush Administration proposed in February. It would have more than tripled GA fuel taxes–from 21.8 cents a gallon to 70 cents a gallon on jet fuel and from 19.3 cents to 70 cents per gallon on avgas–and instituted myriad fees for such things as pilot licensing, registering an airplane or receiving a medical. It also would have increased the fuel tax on airlines, fractionals and on-demand charters from 4.3 cents per gallon to 13.6 cents per gallon.

The Senate Commerce, Science and Transportation Committee approved S.1300 in mid-May by the narrowest of margins after an attempt to strip the per-segment fee failed by a vote of 12 to 11. Last month the Senate Finance Committee convened two hearings on S.1300 to hash out FAA funding.

At the first session, corporate aviation was squarely in the gunsights as the architects of the bill, Sen. Jay Rockefeller (D-W.Va.) and Sen. Trent Lott (R-Miss.), made it clear they want business aircraft users to pay more toward ATC modernization (NextGen).

“I don’t want to create a system where airline passengers subsidize corporate jets,” said Rockefeller, who is chairman of the Senate aviation subcommittee. He argued that corporate jets use ATC services but their operators don’t want to pay for them.
Rockefeller threatened to “look for ways to limit general aviation access to congested airspace” unless corporate aircraft are required to pay more than they currently do. He added that once corporate executives are made to sit on the tarmac at airports such as Teterboro, they might change their thinking. Lott added, “This time we are going to have a fair bill or no bill. I am prepared to go to the mat on this.”

A week later, Lott apparently had softened his stance somewhat. “I have always said this is not written in stone,” he told a panel of witnesses that included airline executives; Eclipse Aviation CEO and president Vern Raburn; Robert Olislagers, executive director of Centennial Airport; and Richard Shine, CEO of Manitoba Recycling, which operates a Mitsubishi MU-2.

A Burden for Small Companies
Shine said that the user-fee plans supported by the airlines and the FAA would be devastating to small- and medium-size companies such as his, which is family owned and employs 60 people.

“I represent a small business that operates a turboprop airplane to help my company survive, and my story is not unique,” he told the Finance Committee’s subcommittee on energy, natural resources and infrastructure. “The general aviation community of which I am a part supports modernization of our aviation system and is willing to help pay for it. But we want to pay at the pump, not through user fees or new taxes.”

Because his business is located near the Canadian border in Lancaster, N.Y., Shine has personal experience with Nav Canada’s user-fee system and commented that it imposes a significant and hidden administrative cost to his business and others that operate on a narrow margin.

He explained, “Several weeks after a flight, Nav Canada’s bureaucracy sends me an invoice. If I’ve made multiple flights I get multiple invoices. I have to take out the invoices and review them to make sure that they’ve charged me correctly. If they haven’t, I need to get on the phone to dispute any inaccurate charges.” Afterward, he has to fill out a purchase order, cut a check and put the check and the invoice back in the mail to Nav Canada.

Shine concluded, “I can’t figure out why anyone would want to put this kind of burden on businesses like mine when we already have a better and more efficient system in place.”